Unit 9 - Simulation
Unit 9 - Simulation
Maumita Roy
Definition:
“Simulation is the process of designing
a model of a real system and conducting
experiments with this model for the
purpose of either understanding the
behavior of the system and/or
evaluating various strategies for the
operation of the system.”
Brief History Not a very old technique...
• World War II
Table F.2
Assignment of Random Numbers
Interval of
Daily Cumulative Random
Demand Probability Probability Numbers
0 .05 .05 01 through 05
1 .10 .15 06 through 15
Probability 0.06 0.14 0.18 0.17 0.16 0.12 0.08 0.06 0.03
The Dealer also knows from his past experience that the lead time is
almost fixed at 5 days. The dealer would like to study the
implications of a possible inventory policy of ordering 30 units ,
whenever the inventory at the end of the day is 20 units. The
inventory on hand is 30 units and use the following sequence of
random numbers to simulate the demand for next 25 days.
Random numbers: 3, 18, 17, 32, 69, 24, 61, 30, 3, 48, 88, 71, 27, 80,
33, 90, 78, 55, 87, 16, 34, 45, 59, 20, 59.
A company uses a high grade raw material. The consumption pattern is
probabilistic as given below and it takes 2 months to replenish stocks:
Cost of placing an order is Rs.1000 and the cost of carrying stocks is Rs.50 per
month per tonne. The average carrying costs are calculated on the stocks
held at the end of each month.
The company has two options for the purchase of raw materials as under:
Option I – Order for 5 tonnes when the closing inventory of the month plus
outstanding order is less than 8 tonnes.
Option II – Order for 8 tonnes when the closing inventory of the month plus
outstanding order is less than 8 tonnes.
Currently on April 1, 2017, the company has stock of 8 tonnes plus 6 tonnes
ordered two months ago. The ordered quantity is expected to be received
next month.
Using random numbers given below, simulate 12 months consumption till
March 31, 2018 and advise the company as to which purchase option
should be accepted such that the inventory costs are minimum.